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en-usTechdirt. Stories about "pandora"https://ii.techdirt.com/s/t/i/td-88x31.gifhttps://www.techdirt.com/Fri, 26 May 2017 13:32:00 PDTPayPal Sues Pandora Over Yawn-Inducing Logos And Tweets About People Opening The Wrong AppTimothy Geignerhttps://www.techdirt.com/articles/20170523/06200537429/paypal-sues-pandora-over-yawn-enducing-logos-tweets-about-people-opening-wrong-app.shtml
https://www.techdirt.com/articles/20170523/06200537429/paypal-sues-pandora-over-yawn-enducing-logos-tweets-about-people-opening-wrong-app.shtml
We're going to jump right into this one without too much of a preamble, other than a quick refresher on what trademark law is designed to accomplish and what triggers a concern for infringement. The idea behind the law itself is to allow companies to utilize unique identifiers, be it name or branding, in order to distinguish itself from competitors by monopolizing those trademarkable items. The chief concern regarding infringement, therefore, is real or potential customer confusion in the marketplace as to the source of a particular product or service. With that out of the way, let's have some fun discussing how a recent lawsuit filed by PayPal against Pandora gets just about everything wrong with respect to the above preamble.

In October 2016, Pandora announced it was redesigning its logo from a thin, serifed "P" into the chunky, sans serifed "P" that it is today. The color scheme was also changed from midnight blue to a softer shade of blue. By comparison, PayPal's logo, active since 2014, also features a minimalist-looking "P" in a sans serif font and sporting a blue color palette. PayPal's mark actually consists of two overlapping and slanted "Ps," whereas Pandora keeps it to one. Both P's lack a hole.

It's over these two logos that PayPal has filed its lawsuit. Here they are, side by side.

Are they similar? I mean, maybe, but only as a function of how minimalist and non-unique each are. Each logo chiefly consists of a blue "P", except one logo has a single "P" and the other has two "Ps" of varying blue-ness and then slants them. As far as ingenuity into a logo design goes, it's not exactly Rembrandt. If you choose to make your identifying branding for your company as blasé as this, what exactly did you expect?

Except that isn't really the sort of confusion that trademark law is supposed to deal with. The interest is in keeping the public from mistaking the origin of a product. That isn't happening in the examples in the filing. Once the music starts playing when a person intended to use PayPal to pay for something, it's not as though that person begins thinking that Pandora suddenly is handling payment processing requests. What those social media posts are really pointing out is that the logos used in each products' app aren't sufficiently unique to be easily identifiable. Coupled with the fact that Pandora and PayPal don't actually compete with one another, the angle of customer confusion as the basis for a trademark infringement is rather head-scratching.

But the larger point is that for trademark law to fulfill its original purpose, names and branding need to be unique. If companies choose not go the unique route, it shouldn't be possible for them to then bludgeon non-competing companies over the head with their trademarks.

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]]>zzzzzzzzhttps://www.techdirt.com/comment_rss.php?sid=20170523/06200537429Fri, 23 Oct 2015 14:48:56 PDTSo How Much Of The $90 Million Pandora Is Paying RIAA Labels To Settle Lawsuit Will Go To Artists?Mike Masnickhttps://www.techdirt.com/articles/20151022/17065832601/so-how-much-90-million-pandora-is-paying-riaa-labels-to-settle-lawsuit-will-go-to-artists.shtml
https://www.techdirt.com/articles/20151022/17065832601/so-how-much-90-million-pandora-is-paying-riaa-labels-to-settle-lawsuit-will-go-to-artists.shtmlsettling the lawsuit filed against it by the RIAA labels over playing pre-1972 sound recordings, Pandora has now done the same, agreeing to pay $90 million to have the lawsuit go away. In both cases, the companies recognized that, while the law was unclear and some lawsuits had gone both ways, it was probably a lot easier in the long run to just pay up than face the uncertainty and the possibility of much larger fees. Of course, both companies do still face some individual lawsuits, such as the ones by Flo & Eddie (the company behind The Turtles) who kicked off this lawsuit craze.

But... there is still a big question. As with pretty much any of these lawsuits filed by the RIAA or MPAA and its members, when they come to a settlement, how much of that money actually gets passed along to the individual creators? In the past, the answer has been slim to none with vague answers about how the money would go into some general pool, and the answer may be similar here. Eriq Gardner at the Hollywood Reporter did the heavy lifting, and got the slightly vague answers from the labels:

For example, will the proceeds of the settlement be shared by the major labels with their recording artists? What share? Upon a request for comment, an RIAA spokesperson said it was a question best directed towards the labels themselves. We've reached out. According to a Sony insider, the label intends to share proceeds in the standard way, analogous to how money from SoundExchange is shared. The source acknowledges that the mechanism is still being worked out. Another source says that Universal intends to process money directly through SoundExchange, a digital royalty collection outfit. A Warner Music spokesperson says the "the artist share [is] being distributed through SoundExchange."

So, they're basically passing the buck to SoundExchange, which handles royalties for Pandora and other digital streaming services, and has an unfortunate history of not being able to find the artists it's supposed to be paying (though, it's been much better in the past few years). But, even so, it's not clear how SoundExchange will divvy up the money, and how much will just be going directly back to the labels themselves.

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]]>we're-waiting...https://www.techdirt.com/comment_rss.php?sid=20151022/17065832601Tue, 15 Sep 2015 09:30:33 PDTTime To Say Goodbye To All Pre-1972 Music?Mike Masnickhttps://www.techdirt.com/articles/20150911/15033332224/time-to-say-goodbye-to-all-pre-1972-music.shtml
https://www.techdirt.com/articles/20150911/15033332224/time-to-say-goodbye-to-all-pre-1972-music.shtmlcould not cover sound recordings. However, various states stepped in and either through explicit state law or through common law, created copyright-like regulations for sound recordings. When copyright was finally updated in the 1976 Copyright Act, pre-1972 works were left out of the federal copyright system, even as federal copyright law basically wiped out all state copyright law for everything else. This has created some weird issues, including that some songs that should be in the public domain under federal copyright law are locked up in perpetuity. A simple and reasonable solution to this would be to just move pre-1972 sound recordings under federal copyright law and level the playing field. But, the RIAA has resisted this. That might seems strange, until you realize that the RIAA and its friends saw this weird quirk of copyright law as a wedge issue with which to try to squeeze more money out of everyone.

It started a couple years ago when basically everyone started suing Sirius XM and Pandora for playing pre-1972 music without getting a separate license to do so. Once again, the reasoning here is a bit complex, but prior to the 1976 Act, there really wasn't even any concept of a "public performance right" for sound recordings -- only for compositions. The idea of one for sound recordings only came into existence with the updated copyright law. But what the RIAA and friends are trying to do is to rewrite history and pretend that these various state laws also retroactively meant to include a public performance right, and that these newer services were violating it.

In a series of rulings in the last year, Sirius XM has lost a few of these lawsuits, while winning another one. This has many copyright scholars quite concerned that decades of settled law are being tossed out.

And that brings up a whole different issue. As you probably know, terrestrial radio does not need to pay at all for the use of sound recordings (it does pay songwriters/publishers for the use of the composition), because Congress has (correctly) noted that songs on the radio are a form of advertising, and thus the musicians benefit from it, and there's no reason to pay fees for the performance again. While the RIAA whines about this, the major labels own decades-long practices around payola make it clear that they, too, recognize that radio play is valuable for the musicians and worth paying for -- rather than worth being paid for.

Every few years, the RIAA pushes to have Congress change the law, and to start making terrestrial radio pay a "performance rights fee" for sound recordings as well. But that never seems to get anywhere. So, instead, the RIAA appears to be attacking this via the pre-1972 loophole, and claiming that even though Congress explicitly has said that radio doesn't need to pay, such a promise does not apply to pre-1972 songs. The new lawsuits, from ABS entertainment, aims to be a class action lawsuit for a bunch of pre-1972 music, and has targeted terrestrial broadcasters who also stream online, including CBS, iHeartRadio (previously known as Clear Channel) and Cumulus -- the big three radio broadcasters.

In the meantime, one of the first original cases concerning this issue, against Pandora, has now moved to the 9th Circuit appeals court and a whole bunch of copyright experts have weighed in hoping that the appeals court will reverse the lower court and remind everyone that these state laws never included a public performance right in the first place. Unfortunately, this is the 9th Circuit, which is somewhat famous for its wacky copyright rulings, so pretty much anything goes here. However, should it come out in favor of the RIAA's position, it could mean that pre-1972 music will start disappearing not just from streaming and satellite radio, but from traditional terrestrial radio as well.

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]]>PAY US screams the recording industryhttps://www.techdirt.com/comment_rss.php?sid=20150911/15033332224Wed, 19 Aug 2015 09:35:38 PDTFunny How Recording Industry Only Likes A 'Free Market' When It's To Their AdvantageMatt Schruershttps://www.techdirt.com/articles/20150817/14000831987/funny-how-recording-industry-only-likes-free-market-when-to-their-advantage.shtml
https://www.techdirt.com/articles/20150817/14000831987/funny-how-recording-industry-only-likes-free-market-when-to-their-advantage.shtml
When it comes to the nexus between competition and regulation, competition is all too often cursed with fair-weather friends. For today's example, we'll take a trip down the copyright regulation rabbit hole.

It begins with a Copyright Royalty Board (CRB) proceeding for setting webcaster rates under a statutory license in Section 114 of the Copyright Act. The process, called "Web IV" because it is the fourth such proceeding under this section of the Copyright Act,[1]was announced late last year and should conclude by the end of 2015. By mid-December, non-interactive webcasters like Pandora and iHeartMedia will know how much they must pay to stream (or "publicly perform") recorded music to listeners from 2016-2020.[2]

These statutory license rates, part of a complex multi-tiered system that, as we've noted in the past, legally requires discrimination against new technologies, are set for 5-year periods and are paid to an entity called SoundExchange. SoundExchange is designated to collect royalties under the statutory license for certain uses of sound recordings, including Internet radio play of music.

(Perhaps you're thinking, "wait, I thought radio stations didn't pay royalties to play records on the air?" You would be right: traditional terrestrial radio does not pay royalties for playing sound recordings – which has historically been defended with the argument that radio play provides valuable promotion for sound recording owners. But in another example of copyright law discriminating against new entrants, while conventional terrestrial radio is not compelled to pay for the public performance of sound recordings, Internet radio must pay to do the same, under Section 106(6) of the Copyright Act.)

The rate Internet radio services pay is supposed to represent what a "willing buyer" would pay a "willing seller." During the round of rate setting that governed 2006-2010, however, the CRB announced a fairly punitive "willing buyer/willing seller" rate, which was so high that it exceeded some webcasters' total revenues. The risk that the Internet radio industry would collapse led Congress to enact the 2008 and 2009 Webcaster Settlement Acts, under which most non-interactive music licensees directly negotiated settlements with SoundExchange for that time period. An important wrinkle to this legislative action, however, was that Congress also directed that these settlements could not be used as benchmarks for future rates – which includes the current rate setting proceeding.

So, why is this relevant? It matters because in the current Web IV rate setting proceeding, SoundExchange has argued that recent deals struck in the free market by non-interactive webcasters should not be used as the benchmarks for non-interactive rates.

Those deals include an arrangement between Pandora and the collection of indie labels known as Merlin. The terms of that deal were lower than the existing statutory rate, and encouraged Merlin music to be played more (and thereby the music of major labels to be played less). At the time, rights-holders openly criticized Merlin for entering in the deal, noting that it could become a benchmark, and might result in prices coming down. It was a peculiar moment: despite all the cheerleading of moving toward a free market in music licensing of willing buyers and willing sellers, Merlin came under fire for actually being a willing seller at the best price it thought it could get.

SoundExchange previous said it was seeking "rates that reflect a fair market value for recorded music… based heavily on evidence of other deals that exist in the marketplace". Now, however, it argues that an analogous free-market deal with Merlin should be ignored, because it was in some way influenced and thereby tainted by settlements reached 6-7 years ago.[3]

This situation illustrates an issue larger than webcaster rate setting: there is cognitive dissonance about what it means to have free-market transactions in lieu of statutory licenses. In parts of the music industry, there is hostility to the statutory licenses. While statutory (or "compulsory") licenses help overcome the enormous transaction costs of licensing millions of works from millions of rights-holders, they don't allow rightsholders to say "no" to all uses.[4] These statutory licenses, it is sometimes argued, are unfaithful to the notion of copyrights being property rights. Such transactions would be better handled in the free market, the argument goes, and so statutory licenses should be repealed.

Nevertheless, the free market enthusiasm disappears when a free-market deal was actually reached outside the statutory license. To the dismay of other licensors, Merlin's competitive price was *lower* than the statutory rate, and suddenly the free market doesn't look so hot. Hence, Merlin was criticized and now efforts are being made to expunge Merlin's deal from the record.

There are numerous transactions cost-related reasons why — absent better copyright ownership records — it is impossible to have a completely free market in music licensing at present. Still, insofar as anyone is going to champion competition as an alternative to statutory licenses, that means accepting prices that may be below statutory rates. If "free market" means rates can only be higher than statutory rates, then we don't have a free market; we have a price floor. Or, stated otherwise: we're not really talking about "willing buyers and willing sellers" if we're only going to entertain market-based deals that come in above the statutory rate.

[2] The CRB only sets rates for "non-interactive digital music services"; interactive services like Spotify, which are "interactive" because users can determine themselves which music is delivered, fall outside the statutory license.

[3] The rationale for this is that Congress directed in Section 114(f)(5)(C) that Webcaster Settlement Act (WSA) agreements shall not "be admissible as evidence or otherwise taken into account" in a rate settlement proceeding. Because SoundExchange contends the Merlin agreement resembles the 2008-09 settlements, considering the Merlin rate would be "taking into account" a WSA agreement.Instead, SoundExchange contends that the benchmarks for non-interactive rates should be deals between interactive services like Spotify. When all the relevant apples are inadmissible, we're left referring to oranges.

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]]>that-free-market-appears-slightly-tilted-in-one-directionhttps://www.techdirt.com/comment_rss.php?sid=20150817/14000831987Fri, 26 Jun 2015 16:01:04 PDTSiriusXM Finally Wins A Case Over Pre-1972 Music... And Promptly Settles Such Cases With RIAAMike Masnickhttps://www.techdirt.com/articles/20150626/15490831475/siriusxm-finally-wins-case-over-pre-1972-music-promptly-settles-such-cases-with-riaa.shtml
https://www.techdirt.com/articles/20150626/15490831475/siriusxm-finally-wins-case-over-pre-1972-music-promptly-settles-such-cases-with-riaa.shtmldid protect some aspects of those sound recordings -- and that's made a huge mess, including locking up some recordings for way, way longer than would be possible under today's federal copyright. On the flip side, however, it meant that certain aspects of federal copyright law that were not covered by state copyright law were fair game -- or so people thought.

This included in music streaming services. It had long been believed that you could publicly perform such pre-1972 songs without a license because, even under the various state and common law copyrights, there was really no concept of a "public performance" right anyway. Thus, services like SiriusXM and Pandora did not need to pay a performance fee to play those songs (for post-1972 recordings, both pay compulsory rates -- which are for different reasons that have to do with lobbying power). This whole mess could be settled by just moving pre-1972 sound recordings under federal copyright law -- which would make them subject to the same compulsory license fees as modern songs, but would also free up those old songs that state copyright law has locked up. It's a tradeoff, but probably the best result. However, the RIAA has fought very hard to block this.

Instead, it wants to have things both ways. It wants to keep those songs locked up for as long as possible, but still wants to get the benefits of federal copyright rights, such as public performance exclusivity. The reason, of course, is that it wants a big weapon -- to force SiriusXM, Pandora and others to pay much larger fees by not allowing them to rely on compulsory rates, but rather to have to come to a negotiated deal.

In order to make this happen there have been a series of lawsuits in different states. In both California and New York, courts ruled against SiriusXM, saying that the state law in California and the common law in NY could be seen to cover performance rights, and thus SiriusXM had to pay up.

However, just a few days ago, a court in Florida went the other way entirely, saying there was no such right in Florida. The state law had nothing and the common law was not established in that area, thus ruling against SiriusXM (and in favor of Flo & Eddie, the organization that brought the suit) would be creating a new right out of thin air (something some copyright experts noted that the other courts had done).

So.... that started to make things interesting. Except... just a few days later, the RIAA and SiriusXM have announced a massive settlement over pre-1972 recordings with SiriusXM agreeing to fork over $210 million. This is going to put enormous pressure on Pandora to come up with a similar settlement. But it's not actually going to answer many of the questions here. First, the settlement only covers the cases brought by the big labels (so not the Flo & Eddie cases...). Second, it only covers through the end of 2017, at which point, it's right back to the negotiating table.

Oh, and in case you're wondering, this line in the Hollywood Reporter story is probably the most important one:

The agreement announced today also doesn't deal with if and how the big record labels will share proceeds with its artists.

Because of course it doesn't.

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]]>well how about that...https://www.techdirt.com/comment_rss.php?sid=20150626/15490831475Wed, 6 May 2015 15:46:22 PDTAppeals Court Rejects Labels' Collusion Scheme To Try To Force Pandora To Pay Higher RatesMike Masnickhttps://www.techdirt.com/articles/20150506/13380130904/appeals-court-rejects-labels-collusion-scheme-to-try-to-force-pandora-to-pay-higher-rates.shtml
https://www.techdirt.com/articles/20150506/13380130904/appeals-court-rejects-labels-collusion-scheme-to-try-to-force-pandora-to-pay-higher-rates.shtmlrecognized what was going on, and mostly sided with Pandora, raising the rates slightly, but nowhere near as much as ASCAP and the publishers sought.

ASCAP and the publishers appealed, but the appeals court has now easily sided with Pandora, seeing no problems with the lower court's rulings. The ruling [pdf] doesn't get into the whole collusion bit, but does note that allowing publishers to do this "partial removal" trick quite clearly violated the letter and spirit of the ongoing "consent decree" that ASCAP has with the Justice Department, to guarantee that it's not violating antitrust law. The consent decree says that if someone wants to license music that ASCAP has the right to license, ASCAP has to provide that license. Since it makes no distinction among different kinds of services, ASCAP can't just make up that part:

Appellants contend that publishers may withdraw from ASCAP its right to license their works to certain new media music
users (including Pandora) while continuing to license the same
works to ASCAP for licensing to other users. We agree with the
district court’s determination that the plain language of the consent
decree unambiguously precludes ASCAP from accepting such
partial withdrawals. The decree’s definition of “ASCAP repertory”
and other provisions of the decree establish that ASCAP has
essentially equivalent rights across all of the works licensed to it.
The licensing of works through ASCAP is offered to publishers on a
take‐it‐or‐leave‐it basis. As ASCAP is required to license its entire
repertory to all eligible users, publishers may not license works to
ASCAP for licensing to some eligible users but not others.

Basically, the consent decree is quite clear: if you have the right to license the music, you have to license it to all-comers, and you can't make up artificial classifications that you won't license it to. As the ruling notes, it seems what ASCAP and the publishers are really trying to do is to rewrite the consent decree on the fly and have the court system sign off on it. The court will not do that:

Appellants would have us rewrite the decree so that it speaks
in terms of the right to license the particular subset of public
performance rights being sought by a specific music user. This
reading is foreclosed by the plain language of the decree, rendering
Appellants’ interpretation unreasonable as a matter of law

Of course, ASCAP, the publishers and the labels have been lobbying quite hard to get the DOJ and/or Congress to throw out the consent decree altogether, so that they can go back to colluding in this matter to try to jack up rates. Expect those efforts to expand even more given this ruling.

Finally, the court also says that the new rates set by the lower court are perfectly fine and it sees no reason to change those rates, no matter how much whining ASCAP might do about the new rates.

Having reviewed 1 the record and the district court’s detailed examination thereof, we conclude that the district court did not
commit clear error in its evaluation of the evidence or in its ultimate
determination that a 1.85% rate was reasonable for the duration of
the Pandora‐ASCAP license. We likewise conclude that the district
court’s legal determinations underlying that ultimate conclusion—
including its rejection of various alternative benchmarks proffered
by ASCAP—were sound.

Basically: just because you say the rates are unfair doesn't make them unfair. Either way, given the way ASCAP and the publishers have whined and complained about this entire process, expect that to reach a new level of ridiculousness in the near future, with a bunch of bogus talk about how absolutely unfair life is for them, even as they rake in tons of money.

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]]>nice-try,-but-nohttps://www.techdirt.com/comment_rss.php?sid=20150506/13380130904Mon, 17 Nov 2014 03:41:00 PSTSiriusXM Loses For A Third Time On Public Performance Of Pre-1972 Works, This Time In New YorkMike Masnickhttps://www.techdirt.com/articles/20141114/17582929153/siriusxm-loses-third-time-public-performance-pre-1972-works-this-time-new-york.shtml
https://www.techdirt.com/articles/20141114/17582929153/siriusxm-loses-third-time-public-performance-pre-1972-works-this-time-new-york.shtmllawsuits started flying like crazy, most directed at Sirius XM, with a few directed at Pandora. The key issue is the fact that pre-1972 sound recordings are not covered by federal copyright law, but a patchwork of (very messy) state laws and common law. Those state laws were never considered to have included public performance rights, but now people are going back to pretend they did. Of course, there would be a simple way to deal with this: just make those recordings subject to federal copyright laws, but the RIAA has fought hard against this.

The judge, Colleen McMahon, acknowledges that this ruling completely upsets decades of accepted practice, but doesn't seem too bothered by it all:

Of course, the conspicuous lack of any jurisprudential history confirms that not paying
royalties for public performances of sound recordings was an accepted fact of life in the
broadcasting industry for the last century. So does certain testimony cited by Sirius from record
industry executives, artists and others, who argued vociferously before Congress that it was unfair
for them to operate in an environment in which they were paid nothing when their sound recordings
were publicly performed.... That they were
paid no royalties was a matter of statutory exemption under federal law; that they demanded no
royalties under the common law when their product as ineligible for federal copyright protection
is, in many ways, inexplicable.

But acquiescence by participants in the recording industry in a status quo where recording
artists and producers were not paid royalties while songwriters were does not show that they lacked
an enforceable right under the common law - only that they failed to act on it.

Instead, she notes that the reason this is only coming up now is because Congress only created a performance right for digital music recently. That doesn't really make much sense when you think about it. If the industry was really sitting on this potential goldmine of performance royalties for decades, wouldn't it have made use of it before now?

Instead, the judge defaults to a purely maximalist approach, saying that absent any specific exemptions, we should assume that common law copyright in New York covers just about every damn thing.

Modern federal law supports the notion that an express carve-out is required in order to
circumscribe the bundle of rights appurtenant to copyright

That should raise some serious First Amendment questions. In federal copyright law, the Supreme Court has argued that the First Amendment conflict is generally resolved through exceptions to copyright -- including those established in common law, like fair use. Yet here, the court is basically saying, unless an exemption is clearly stated, everything is covered. That's very troubling.

Of course, it's likely that this, like the California cases, will be appealed, and it will all eventually end up before the Supreme Court. But, in the interim, don't be surprised if "golden oldies," including pretty much all music from pre-1972, start disappearing from a variety of services. Good job, recording industry, you may succeed in driving the classics into total obscurity.

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]]>a-big-shakeuphttps://www.techdirt.com/comment_rss.php?sid=20141114/17582929153Thu, 16 Oct 2014 20:51:26 PDTSirius XM Hit Again Over Pre-1972 RecordingsMike Masnickhttps://www.techdirt.com/articles/20141016/06025128843/sirius-xm-hit-again-over-pre-1972-recordings.shtml
https://www.techdirt.com/articles/20141016/06025128843/sirius-xm-hit-again-over-pre-1972-recordings.shtmllost its case concerning the public performance rights over pre-1972 sound recordings by the band The Turtles. As we noted, this ruling effectively upset decades of consensus about public performance rights for pre-1972 works. When that ruling came out, we noted that the judge, in a nearly identical case brought by the RIAA, appeared to be leaning in the opposite direction. It appears that the judge, Mary Strobel, read the other ruling and found it convincing enough to lean back in the other direction. While not a final determination in the case, Strobel has issued a ruling (pdf) that makes it pretty clear that Sirius XM is likely to lose, based on her agreement with that other ruling.

Having considered the additional authority, the
papers submitted and arguments of counsel, the court is persuaded that it should
change its tentative ruling.

The ruling itself is more of an essay of "on the one hand, on the other hand" arguments, rather than a typical judicial ruling (in many ways making it more readable), with the judge more or less suggesting that she's not entirely comfortable with this outcome, but that based on the plain language of California's state copyright law, this is the best way to read the law.

Of course, the real mess here is because of the different treatment of pre-1972 recordings. Congress should have fixed this years ago by just making pre-1972 recordings subject to federal copyright law. Except... the recording industry has actually fought hard against this. The hypocrisy here is huge. While the recording industry has fought so hard against making pre-1972 sound recordings subject to federal copyright laws, now they suddenly want aspects of federal copyright law (like public performance rights which did not exist under previous laws) to apply to those very same works. If Congress made it so those works were under federal copyright, there wouldn't be an issue and all these works would be treated identically. But the truth is that the RIAA wants to keep these works out of federal copyright law to use them as a weapon against internet innovation. With rulings like these, it can hold companies like Pandora hostage, since those works wouldn't be subject to compulsory rates. As always, it's all about the RIAA seeking to hold back innovative services unless they'll go bankrupt in paying the RIAA.

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]]>convinced-by-the-other-rulinghttps://www.techdirt.com/comment_rss.php?sid=20141016/06025128843Fri, 3 Oct 2014 09:31:00 PDTHow The Sirius XM Ruling Upsets Decades Of Copyright Law ConsensusMike Masnickhttps://www.techdirt.com/articles/20141002/15301828704/how-xm-sirius-ruling-upsets-decades-copyright-law-consensus.shtml
https://www.techdirt.com/articles/20141002/15301828704/how-xm-sirius-ruling-upsets-decades-copyright-law-consensus.shtmlruling against Sirius XM on the issue of streaming pre-1972 recordings. As we noted at the time, the ruling appeared to upset what was considered more or less a settled issue. Pre-1972 sound recordings are not covered by federal copyright laws, but rather by a hodgepodge of state laws (and common law), but those have been entirely focused on reproduction/distribution and not on public performance. But this ruling changed all that. Sirius XM, of course, has already made it clear that it's appealing the ruling, and on the other side, the victors in last week's ruling, Flo & Eddie, have already moved to sue Pandora as well.

While I tried to express how much this ruling upsets what had been considered pretty much solid law, law professor Tyler Ochoa does an astounding job actually detailing the history and just what a big change this ruling is, calling it a "seismic" ruling on the scale of the 1906 San Francisco earthquake. Here's just a snippet, though you really ought to read the whole thing, detailing historical case law that this ruling totally upends:

...in the early days of radio, sound recording copyright owners also tried to use state law to restrict unauthorized broadcasts of sound recordings (which, as explained above, were not eligible for federal copyright). In 1937, in Waring v. WDAS Broadcasting Station, 194 A. 631 (1937), the Pennsylvania Supreme Court held that state common law prevented the unauthorized broadcast of phonograph records (when the legend “Not Licensed for Radio Broadcast” was printed on the records); but in 1940, in RCA Mfg. Co. v. Whiteman, 114 F.2d 86 (2d Cir. 1940), the U.S. Court of Appeals for the Second Circuit, in an opinion by Judge Learned Hand, held that common-law copyright prevented only the duplication of a sound recording, and that sale of phonograph records exhausted any common-law property right to prevent the unauthorized broadcast of the recording (notwithstanding the same restrictive legend). The Supreme Court denied certiorari, which effectively meant that broadcasters did not have to pay royalties to sound recording copyright owners to play their records on the radio. (Broadcasters still had to pay royalties to musical work copyright owners, under federal copyright law.)

... when sound recordings were added to the federal copyright act in 1972, Congress likewise limited the exclusive rights that were provided to sound recording copyright owners. Authors of most copyrightable works receive five exclusive rights: the right to reproduce the work, to adapt or prepare derivative works based on the work, to publicly distribute copies of the work, to publicly perform the work, and to publicly display the work. But broadcasters had enough lobbying power to block any action in Congress if it required them to pay more royalties. As a result, Congress gave sound recording copyright owners only the right to reproduce and distribute copies of the sound recording, and to prepare derivative works (by electronic manipulation of the sounds recorded, not by imitation or simulation). Congress did not give sound recording copyright owners any right to publicly perform their works. (The policy argument was that radio airplay served as free advertising for the sale of phonograph records.)

In other words, contrary to what you'll hear today from the record labels and copyright maximalists, this ruling was not obvious or about Sirius XM, Pandora and others ripping off artists. This was actually about them upending what had been considered completely settled law. It was only in 1995 that Congress first established that copyright had any sort of "public performance" exclusivity -- and then only for post-1972 recordings (remember, the recording industry itself has fought quite hard to exempt pre-1972 sound recordings from other aspects of federal copyright law) and only on digital streaming. So, to argue that pre-1972 state and common law somehow was intended to cover such a public performance right is almost impossible to fathom. Yet that's what the court ruled.

And the impact could be immense. Beyond just Sirius and Pandora, it could hit a lot of others as well. In a big way, in part by undermining the very foundations of the DMCA safe harbors.

The ruling is a huge victory for sound recording copyright owners, which can use the ruling not only to negotiate higher negotiated rates for public performance of pre-February 15, 1972 sound recordings, but may also use such older recordings as leverage for negotiating higher rates for post-February 15, 1972 sound recordings. (Such negotiation tactics might be deemed to be copyright misuse, but it is unclear whether state law will recognize this federally-recognized defense.) Moreover, nothing in the decision limits the state-law violations to public performance by means of digital audio transmission, so the decision gives sound recording copyright owners the general public performance right in pre-February 15, 1972 sound recordings that they have always craved, but that was previously denied to them under federal law (and was assumed not to exist in state law under Whiteman). That means that traditional AM/FM broadcasters and television broadcasters, who are expressly exempt under federal law with respect to post-February 15, 1972 sound recordings, can expect to be sued next.

Sound recording copyright owners can also use the ruling to go after internet service providers. Section 512 of the federal Copyright Act provides that internet service providers are not liable for infringements committed by their users, so long as the service provider promptly complies with the “notice-and-takedown” provisions of that section. But because Section 301(c) states that pre-February 15, 1972 sound recording copyrights are not preempted by the federal act, sound recording copyright owners have been suing internet service providers under state law, arguing that service providers are liable for reproduction and electronic distribution of pre-February 15, 1972 recordings under state law, and that the limitation of liability provided by federal law does not apply. Existing court decisions so far are split, with the New York Appellate Division holding that Section 512 does not apply to pre-February 15, 1972 sound recordings, because of the express terms of Section 301(c); while the U.S. District Court for the Southern District of New York has held that Section 512 does apply to pre-February 15, 1972 sound recordings, notwithstanding Section 301(c).

In the meantime, Ochoa notes, expect "oldies" to start disappearing from lots of different services as companies seek to limit their liability. Funny how yet another copyright ruling is likely to make music even more scarce.

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]]>activist judges...https://www.techdirt.com/comment_rss.php?sid=20141002/15301828704Wed, 24 Sep 2014 03:48:25 PDTJudge Rules Against Sirius XM On Pre-1972 RecordingsMike Masnickhttps://www.techdirt.com/articles/20140923/17250328610/judge-rules-against-sirius-xm-pre-1972-recordings.shtml
https://www.techdirt.com/articles/20140923/17250328610/judge-rules-against-sirius-xm-pre-1972-recordings.shtmllawsuits against Sirius XM concerning the legal rights over pre-1972 recordings. As we've discussed, pre-1972 sound recordings are not under federal copyright law (for historical reasons too convoluted to go into now), but are covered under a hodgepodge of messy state copyright laws. Historically, those state laws have been focused on reproduction and distribution and not public performance. Furthermore, terrestrial radio stations have always been allowed to broadcast music without paying performance royalties (though they do pay songwriters/publishers). Post-1972 recordings can be streamed at statutory rates for non-interactive streaming (interactive streaming is a whole different game). It's a bit of a mess, but based on all of this Sirius XM (and Pandora and others) felt fairly confident that they did not have to separately license public performance rights for pre-1972 recordings. There had been no issue about this at all, until the lawsuits started flooding in last year.

And, in a ruling this week, the judge has... ruled against Sirius XM in a manner that may force Sirius and Pandora to eventually have to pay out big. This lawsuit was the first one against Sirius, filed by Flo & Eddie, claiming that their California state copyrights were violated. The court basically found that, because California copyright law says that the copyright holder has "exclusive ownership" of the copyright, that includes public performance rights, despite no further explanation in the law designating that as an exclusive right under California's copyright.

In short, the judge takes a very expansive "property rights" view of the situation, and assumes that California's copyright law basically restricts everything.

Commonly, to have
“exclusive ownership” in something is to possess and control it and to not share that right to
possess and control with others. See THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH
LANGUAGE 619, 1260 (Houghton Mifflin Harcourt, 5th ed. 2011) (defining “exclusive” and
“ownership”). The California legislature defines “ownership” generally in the Civil Code in a
manner consistent with the word’s usual and ordinary meaning—“the right of one or more
persons to possess and use [a thing] to the exclusion of others.” Cal. Civ. Code § 654. Thus, at
base, Flo & Eddie has the right to possess and use its sound recordings and prevent others from
possessing and using them. The plain meaning of having “exclusive ownership” in a sound
recording is having the right to use and possess the recording to the exclusion of others. There is
nothing in that phrase to suggest that the legislature intended to exclude any right or use of the
sound recording from the concept of “exclusive ownership.”

The legislature does include a limitation on the ownership right in the statute’s text, “the
most reliable indicator of legislative intent.” See Esberg, 28 Cal. 4th at 268. An author has
exclusive ownership in his or her sound recording “against all persons except one who
independently makes or duplicates another sound recording that does not directly or indirectly
recapture the actual sounds fixed in such prior recording, but consists entirely of an independent
fixation of other sounds, even though such sounds imitate or simulate the sounds contained in
the prior sound recording.” Cal. Civ. Code § 980(a)(2) (emphasis added). In other words,
ownership of a sound recording does not include the exclusive right to make “covers” (i.e.,
recording the song with new instruments) – any person can make a sound recording based on a
copyrighted recording, without the permission of the owner, so long as they produce the sounds
independently rather than recapture the actual sounds in the copyrighted recording.

Construing the meaning of “exclusive ownership” in context with the rest of § 980(a)(2),
which lists the above exception to the ownership right, the Court infers that the legislature did
not intend to further limit ownership rights, otherwise it would have indicated that intent
explicitly. Because the statute lists an exception, the Court should enlist the “familiar rule of
construction…[that] where exceptions to a general rule are specified by statute, other exceptions
are not to be implied or presumed.” Geertz v. Ausonio, 4 Cal. App. 4th 1363, 1370 (1992)
(citing In re Michael G., 44 Cal. 3d 283, 291 (1988). Courts should “presume the Legislature
included all the exceptions it intended to create.” Id. (citing Reynolds v. Reynolds, 54 Cal. 2d
669, 681 (1960)). If § 980(a)(2) had granted “exclusive ownership” in sound recordings without
a listed exception, the argument that some limitations on property rights were already inherent in
the concept of sound recording ownership might have been more persuasive to the Court. See
Opp. 6:21-7:4, 8:25-9:2. However, by finding it necessary to specify an excepted right to
ownership in a sound recording, the legislature conveyed that limitations on ownership did not
live within the concept itself, rather they required elucidation.

Accordingly, the Court’s textual reading of § 980(a)(2), giving the words “their usual and
ordinary meaning and construing them in context[,]” is that the legislature intended ownership of
a sound recording in California to include all rights that can attach to intellectual property, save
the singular, expressly-stated exception for making “covers” of a recording.

Sirius XM pointed out the legal problems with this, in that California law did not have a public performance right, and thus the court is effectively making up a new right under to bolt onto California's copyright law, but the judge isn't buying it. Sirius further pointed out that California's copyright law was designed to highlight what rights remained under its copyright law after the federalization of copyright for sound recordings, but again the judge isn't buying it.

It's inevitable that Sirius will appeal this ruling so it will be a while before we see where this actually ends up. Furthermore, in one of the other cases against Sirius, brought by the RIAA, it appears that the judge is leaning in the exact opposite direction. So, this situation is far from over.

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]]>this could be quite a messhttps://www.techdirt.com/comment_rss.php?sid=20140923/17250328610Mon, 28 Jul 2014 09:59:18 PDTKilling The Golden Goose: Copyright Holders Demand More Cash Even As Streaming Music Services Struggle To Be ProfitableMike Masnickhttps://www.techdirt.com/articles/20140727/12322628030/killing-golden-goose-copyright-holders-demand-more-cash-even-as-streaming-music-services-struggle-to-be-profitable.shtml
https://www.techdirt.com/articles/20140727/12322628030/killing-golden-goose-copyright-holders-demand-more-cash-even-as-streaming-music-services-struggle-to-be-profitable.shtmlkill the golden goose any time a new and successful service has come along that actually helped drive them into the modern era. These services never actually come out of the industry itself, and thus are almost always hated (often with a passion) by the legacy players who failed to innovate, and now fear the potential alternative power in their industry. It's no secret that the legacy record labels and studios maintain their position by trying to control every aspect of their market, rather than by innovating to what the public wants.

In the music space, there have been a growing number of complaints from industry insiders about just how unfair it is that companies like Pandora and Spotify are successful. You see complaints that these services don't pay enough and a search for regulatory changes to demand more cash from these companies. And yet, Pandora and Spotify are both having tremendous difficulty reaching anything approximating profitability -- in large part because the existing costs of the music they stream is so ridiculously high.

Spotify, by contrast, needs to negotiate directly with content owners (record labels and publishers) and maintain a huge library to satisfy all of its users’ different tastes, even though a large proportion of those songs are apparently never played. So its royalty costs are fixed at a high proportion of its revenues.

Ultimately, this means Pandora has a much leaner cost base than other services do. It paid out around 50% of its revenue in royalties last year. For Spotify, that figure is closer to 70%.

And yet, Pandora is still not really making money. Since its IPO in mid-2011, the company has eked out a quarterly profit just twice (Wall Street is expecting another small profit when it reports earnings on Thursday, July 24). Over the last two financial years it has racked up more than $75 million in losses. And despite these losses, content owners (record labels and publishing companies), perhaps envious of its growing user base and elevated share price, have been aggressively trying to squeeze more out of it in royalties. For some, this offers evidence of structural flaws in the Pandora business model.

It doesn't seem like a structural flaw in the business model, so much as the legal regime that assumes that it's the content alone that is the value, and that the service has no value at all. The legacy content guys see any profits at all as a sign that they're somehow being screwed over and underpaid, and thus they have to angrily demand more and more. It's happened over and over again. Remember how popular ringtones were? Part of the reason they went out of style was that the industry desperately saw it as a place to get ever more money from. Ditto for music video games.

The industry systematically overvalues the content and undervalues the service. That's not to say that the content shouldn't be paid for. But it's incredible how long a history we have of the legacy recording industry consistently smothering innovative new services with oppressive costs, frequently driving them out of business. They consistently kill the golden goose because they hate the idea of any outsider having success, even as they fail to innovate.

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]]>because-that's-how-it-always-workshttps://www.techdirt.com/comment_rss.php?sid=20140727/12322628030Fri, 18 Jul 2014 09:11:35 PDTASCAP's Desire To End Antitrust Agreement Leads DOJ To Investigate Latest Collusion Between Music PublishersMike Masnickhttps://www.techdirt.com/articles/20140715/14491927882/doj-begins-investigating-collusion-music-publishers-just-as-publishers-insist-old-anti-trust-rules-shouldnt-apply.shtml
https://www.techdirt.com/articles/20140715/14491927882/doj-begins-investigating-collusion-music-publishers-just-as-publishers-insist-old-anti-trust-rules-shouldnt-apply.shtmlend the so-called "consent decree" around music publishing. This was an agreement from 1941 (and reviewed in 2001) limiting how performance rights organizations like ASCAP and BMI could act, given their position as a somewhat natural monopoly over the compositions they represented. The idea was to stop those companies from holding those works hostage -- which is why there are things like rate setting procedures by the Copyright Royalty Board. Now, we have our problems with the CRB and the rate setting process, but there is a very real fear that ASCAP, BMI and others would make music streaming prohibitively expensive if given the chance. The whole focus on getting rid of the consent decree is to try to remove any effort to block them from jacking up their prices to ridiculous rates.

The attempt to ditch the consent decree seemed especially odd, given that just months earlier, a court had called out the clear collusion by ASCAP and a bunch of music publishers to try to artificially jack up Pandora's rates. The details were a little convoluted, but basically certain publishers "withdrew" certain music from ASCAP, claiming they wanted to negotiate directly with Pandora. They didn't negotiate in good faith, and basically waited right up until the deal was about to expire. They then refused to even name what songs would no longer be covered, leaving Pandora at a very real risk of streaming songs it no longer had the right to (without even knowing which songs were being "pulled.") Because of this, Pandora was forced to sign exorbitantly high rates, which ASCAP and others then used to try to get even higher rates for others. It was clearly collusion, because while ASCAP should have been upset about publishers withdrawing music, it clearly was not. Furthermore, there were clear discussions between ASCAP and the publishers about all of this.

The end result of that case was that ASCAP lost its attempt to really jack up rates to Pandora much higher, but many people wondered how ASCAP could get away with doing that without any sort of punishment. Well... new reports say that the Justice Department is
investigating ASCAP, BMI, Universal Music Publishing and Sony/ATV over possible collusion. This is being done as part of the DOJ's review of the consent decree, but ASCAP's decision to attack the consent decree right after a court called it out for collusion may backfire badly:

The CID requests are seeking documentation across a lot of particulars, including the effect of the consent decrees on rates, whether partial withdrawals of digital rights should be allowed, and plans to license other rights beyond the public performance rights that PROs handle today. However, a memo obtained by Billboard that was sent to employees by ASCAP senior VP of legal Richard Reimer began by noting that the CID is connected to the DOJs review of the consent decree. And, as a possible reminder to be careful of what you wish for, the DOJ is also investigating of alleged coordination among ASCAP, BMI, Sony/ATV Music Publishing, and Universal Music Publishing Group.

That aspect of the DOJ investigation was mentioned in a note to ASCAP employees telling them to "preserve all documents, whether in paper or electronic format, on all the CID-related topics."

In the Billboard article, the publishers and ASCAP insist they're not worried about all of this because they believe the judge in the Pandora rate setting case "got it wrong." That's quite a bit of hubris to have, given all of the evidence of collusion that was presented in that case. It seems quite possible that rather than ending the consent decree, as ASCAP and publishers would like, the DOJ may actually come down on all of them for some fairly serious antitrust problems.

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]]>look-at-thathttps://www.techdirt.com/comment_rss.php?sid=20140715/14491927882Fri, 25 Apr 2014 11:03:00 PDTRIAA Claims That It Is 'Standing Up For' Older Musicians That It Actually Left To RotMike Masnickhttps://www.techdirt.com/articles/20140425/07192227027/riaa-claims-that-it-is-standing-up-older-musicians-that-it-actually-left-to-rot.shtml
https://www.techdirt.com/articles/20140425/07192227027/riaa-claims-that-it-is-standing-up-older-musicians-that-it-actually-left-to-rot.shtmlRIAA accounting, you'd know about how they structure deals to totally screw over musicians, doing everything possible to make sure they never get paid a dime. Yes, many are given advances, but those advances are "loans" on terrible terms in which the labels add on every possible expense that needs to be "paid back" before you ever see another dime. Very few musicians ever "recoup" -- even after the labels have made back many times what they actually gave the artists. For the most succinct example of how the labels make out like bandits, profiting mightily while still telling artists they haven't recouped, here's Tim Quirk, who a few years back explained how it worked with his band, Too Much Joy (TMJ):

A word here about that unrecouped balance, for those uninitiated in the complex mechanics of major label accounting. While our royalty statement shows Too Much Joy in the red with Warner Bros. (now by only $395,214.71 after that $62.47 digital windfall), this doesn't mean Warner "lost" nearly $400,000 on the band. That's how much they spent on us, and we don't see any royalty checks until it's paid back, but it doesn't get paid back out of the full price of every album sold. It gets paid back out of the band's share of every album sold, which is roughly 10% of the retail price. So, using round numbers to make the math as easy as possible to understand, let's say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.

In other words, musicians don't get paid anything in most cases, while the labels can earn a tidy profit for years and years, still insisting the band hasn't recouped. It's why a band can sell a million albums and still owe $500,000.

I bring this up, because of the latest ridiculousness from the RIAA, claiming that it "stands behind" artists who aren't making enough money. We've already written about the latest lawsuit against Pandora, in which the RIAA/Soundexchange are saying that Pandora isn't paying pre-1972 artists (despite the fact that the RIAA itself refuses any attempt to put those recordings under federal copyright law, which would mandate compulsory licenses). We've also covered the ridiculousness of the RIAA releasing bizarre statements from artists like Steve Cropper, pretending that programmers still get paid for code they wrote in 1962.

But now it's reached truly ridiculous levels. musicFirst, a lobbying group put together by SoundExchange and the RIAA (potentially violating some laws), has put out an astoundingly ridiculous blog post, in which it discusses these lawsuits over pre-1972 sound recordings, by arguing that it is standing up for pre-1972 artists and not letting them "fade away" (a weak reference to a Buddy Holly song).

What a shady move. Fans will go to record stores to pay for this timeless music, but billion dollar corporations won’t pay a dime. And these services sell those same fans stations like the “60s on 6” and the “Buddy Holly station” yet refuse to give one dime of subscribers’ payments to the artists that made the music on those stations.

No matter what the outcome is in courts of law, Sirius XM and Pandora will pay a hefty price in the court of public opinion and in Congress. We love and respect our pre-72 artists and we will stand up for them. We will not let them fade away.

Oh really? You won't let those artists fade away? Then I assume you'll be going back and paying all of those artists you screwed over for decades, right? Let's start with Lester Chambers, for example, who got some attention a couple years ago, for how the RIAA totally fucked him over and let him fade away:

Of course, it wasn't the RIAA, SoundExchange or musicFirst who helped him out. It was the internet, led by Reddit founder Alexis Ohanian, who helped Chambers raise over $60,000 on Kickstarter for a fantastic new album (it really is great, if you haven't yet heard it) -- and that money went to Chambers, not to a label who then refused to pay royalties. Or how about all of those artists who are seeking to take back their copyrights thanks to the copyright termination clause, which the RIAA is fighting tooth and nail against -- the same copyright termination clause that the RIAA's number two guy tried to secretly delete from copyright for musicians, while he was a Congressional staffer (months before taking his $500,000 salary at the RIAA, where he's remained until today).

So, whether or not Pandora and Sirius XM are right or wrong in how they handle the streaming royalties on pre-1972 works, the idea that the RIAA is somehow out there "protecting" older artists and not letting them fade away is a sick joke.

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]]>wtf?https://www.techdirt.com/comment_rss.php?sid=20140425/07192227027Tue, 22 Apr 2014 11:06:51 PDTCopyright Maximalists' Incredible Sense Of Entitlement: If It Challenges The Biz Model We Chose, It Must Be IllegalMike Masnickhttps://www.techdirt.com/articles/20140422/05394826987/copyright-maximalists-incredible-sense-entitlement-if-it-challenges-biz-model-we-chose-it-must-be-illegal.shtml
https://www.techdirt.com/articles/20140422/05394826987/copyright-maximalists-incredible-sense-entitlement-if-it-challenges-biz-model-we-chose-it-must-be-illegal.shtmlovervaluing the content and undervaluing the service. That is, any time they see a new service come along that the public really likes, they insist that all or nearly all of the value must be attributable to the content and not the service. Thus, they will always argue that "the service" is somehow ripping them off. We've seen it over and over again, from ringtone royalties to Guitar Hero to Pandora and others. Every time the story is the same: these other companies are making some money (even if they already pay us) and therefore we're getting screwed. If anyone else is making any money, then the copyright holders start screaming about how it's completely and totally unfair.

In their minds, the value of the service is meaningless. The fact that they were unable to provide such services directly themselves gets totally ignored. They just insist that 100% of the value is the content, and thus they need to get more money. Nevermind the fact that companies like Pandora already pay nearly all of their revenue to the copyright holders. There's always more blood to be squeezed from that stone, even if it means killing the golden goose (to mix a few parables).

Two recent stories illustrate this extreme entitlement, and total dismissal of the value of anyone else, perfectly. Let's start with the Aereo case, which was heard today at the Supreme Court. It will be some time before the court rules, but check out this quote from Gordon Smith, the president of the National Association of Broadcasters on why he believes Aereo is breaking the law:

“Quite simply, Aereo takes copyrighted material, profits from it and does so without compensating copyright holders,” said Gordon Smith, the president of the National Association of Broadcasters.

Of course, that's misleading in the extreme for a variety of reasons. First of all, there are lots of areas where it's perfectly legal to profit from copyrighted materials without compensating copyright holders. Used book stores and used record stores (back when such things existed) are a perfect example. Fair use is another. The point is: just because someone is making a profit does not mean that the copyright holders have to get paid. That's never been the case. In fact, it's the same fallacy described above. People are flocking to Aereo because it provides a better service than the cable companies. But the broadcasters ignore all of that and insist all of the value must come from the content itself.

That brings us to the second story highlighting this, which involves comments over in the EU concerning the legality of reselling digital media. Not surprisingly, the record labels, represented by the IFPI and BPI, are 100% against this sort of thing for no logical reason, other than that consumers might actually prefer such a system. They specifically highlight that the quality and convenience of digital resales are too good, and that might upset the business model the record labels have chosen. The argument echoes the labels' argument against ReDigi in the US, a service that allows people to resell digital content that has been shut down in the US.

Again, the focus here has nothing to do with what's right or what's best for the public. In fact, the entire argument appears to be "fuck the public, we need more money." It completely ignores multiple studies that have shown that a thriving used goods market increases the value of the original market. It ignores the idea that making things easier and better for consumers is a good thing. Instead, it's all about overvaluing the content and undervaluing everything else.

This all goes back to a point we made years ago: industries that have embraced copyright for the entirety of their business model have set copyright up as a crutch on which they lean. Rather than exercising the rest of their body, finding all sorts of other good business models that allow them to improve the experience for customers, they just keep leaning on that crutch and insist it's entirely necessary for them to live. And thus, those other muscles atrophy and wither away. So now that the world is changing and innovating, and others are demonstrating lots of great ways to better serve the public, the copyright maximalists are insisting it's all impossible. They need that damn crutch, and anything else is "piracy." They only have themselves to blame, of course. For decades, people have been explaining to them and showing them how to build better services, how to offer better experiences for everyone, while still making money. And, all they do is lean more on that old crutch and insist it's the only possible way to walk.

It's a massive sense of entitlement, in which they appear to have no self-awareness that they're actively advocating for a world in which the public is worse off.

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]]>incredible-sense-of-entitlementhttps://www.techdirt.com/comment_rss.php?sid=20140422/05394826987Mon, 21 Apr 2014 10:08:58 PDTCan Anyone Name A Programmer Still Getting Paid For Code He Wrote In 1962?Mike Masnickhttps://www.techdirt.com/articles/20140418/04283326954/can-anyone-name-programmer-still-getting-paid-code-he-wrote-1962.shtml
https://www.techdirt.com/articles/20140418/04283326954/can-anyone-name-programmer-still-getting-paid-code-he-wrote-1962.shtmllegal attack on Pandora over royalties on pre-1972 sound recordings. The legal issues there are complex and convoluted, involving a mix of state common law along with federal copyright law. However, the RIAA has clearly decided that it's not going to delve into the nuances there, preferring to go with totally bogus spin. This started with an opinion piece by SoundExchange's CEO, in which he claimed that it was unfair that artists from pre-1972 works weren't getting paid. And with the launch of this lawsuit, the RIAA is trotting out some artists who are making similarly bogus statements:

The RIAA circulated the lawsuit on Thursday along with quotes from artists or their heirs. "It’s an injustice that boggles the mind," says Booker T. & the MG's Steve Cropper. "Just like the programmers who deserve to be paid for their work, I deserve to be paid for mine.”

This depresses me, in part, because I'm a huge Steve Cropper fan -- and have spent tons of money purchasing a variety of music from Booker T. & the MG's over the years (and plenty of other of Cropper's work both at Stax and elsewhere). However, this is a really unfortunate and misleading argument. It's obviously an attempt to hit at those terrible "techies" at Pandora, implying that Pandora's engineering staff continually gets paid for their work.

But it actually underlines how silly the RIAA's argument is here. Because no Pandora programmer expects to get paid for his work 50 years from now. They get paid today to work today. And that's it. If that person leaves Pandora tomorrow, then they don't keep getting paid for it. Nor do they expect their children and grandchildren to keep getting paid for it. Booker T. and the MG's biggest hit, Green Onions, came out in 1962. It would be great if Cropper could point to a programmer who is still getting paid for code he wrote in 1962. Because I would imagine it's not a very big list.

This is also why many of the other quotes the RIAA is pushing concerning this effort are so misleading as well. Buddy Holly's wife, Maria Elena Holly, rightly notes that "Many artists from the 1950s are retired and struggling to support themselves or have families or heirs who are trying to make ends meet." That is, no doubt, true. But that's a different issue. Copyright was never meant to be a welfare system for artists. It was never meant to keep paying them in retirement. It was meant to be an incentive to create, and once it worked, that was it. In fact, under the copyright laws that were in place in 1958 when Buddy Holly released his hit "Everyday," the absolute longest that the copyright on that song could have lasted was 56 years. In other words, when Holly released that song, he knew that by 2014 (hmmm...) that song would be in the public domain. So it seems, well, a bit unseemly to suddenly be whining about it now.

In fact, I'm sure that many programmers from the 1950s are similarly "retired and struggling to support themselves or have families or heirs who are trying to make ends meet." And many of those retired programmers created the underlying structure and systems for today's computers and internet, which has created so much value for the world. But we don't see them and their heirs whining about how the world owes them a living for work they did more than half a century ago.

And this is the problem. There are almost no professions in the world in which you get to do some work (even if it's amazing work) half a century ago, and then still have people paying you for it today. To act like this is some sort of massive offense just seems silly and misguided.

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]]>we'll waithttps://www.techdirt.com/comment_rss.php?sid=20140418/04283326954Fri, 18 Apr 2014 11:10:00 PDTAnd, Of Course, Labels Sue Pandora Over Pre-1972 RecordingsMike Masnickhttps://www.techdirt.com/articles/20140418/04085126953/course-labels-sue-pandora-over-pre-1972-recordings.shtml
https://www.techdirt.com/articles/20140418/04085126953/course-labels-sue-pandora-over-pre-1972-recordings.shtmlhave it both ways. That is, on the one hand, they are arguing in a variety of cases that the DMCA shouldn't apply to pre-1972 sound recordings, while also arguing against any attempt to treat pre-1972 sound recordings the same as if they were under federal copyright law. At the same time, they are claiming that it's somehow unfair that Sirius XM and Pandora aren't paying statutory licensing fees on those very same pre-1972 recordings.

Having already sued Sirius XM over the issue last fall, the RIAA's record labels have now targeted a similar lawsuit at Pandora. The lawsuit itself is highly misleading, taking statements from Pandora totally out of context (the labels have a habit of doing this). The most obnoxious of these misrepresentations is the RIAA's claim that Pandora recently stated in SEC filings that there's a risk factor if the company is "required to obtain licenses from individual sound recording copyright owners for the reproduction and public performance of pre-1972 sound recordings."

The RIAA presents this as if it's Pandora trying to get out of paying. But that's not what Pandora is saying at all. It's noting that because pre-1972 works are not covered by the various rates that it pays which are set by the Copyright Royalty Board, in order to secure the rates, it would need to negotiate individually with every copyright holder for the right to stream those works in every single state. But it's noting that as a risk factor -- because, as Sirius has pointed out in its own response to the similar lawsuit, decades have gone by and the labels have never been asking for licenses for performances of pre-1972 works. And those works have been used for years, license free, by TV and radio broadcasters, bars, restaurants and a variety of other places. The real risk is that Pandora, which has relied on the fact that it can take compulsory rates, would then suddenly have to negotiate with everyone, which would be a massive headache. And this is the mess caused by the weird way in which pre-1972 sound recordings are treated.

Again, those works are not covered by federal copyright laws, which include specific rights over performances of works, which was something of a new concept when it was added to federal copyright law. The various state laws that these works are covered by are generally common law concepts around misappropriation and unfair competition. So the big question is whether or not "performing" a work falls under such common law concepts. Historically, these claims were mostly focused on making unauthorized copies. Performing the work has generally been considered a separate issue. This makes it a bit questionable that the RIAA is now suddenly seeking to reinterpret a big swath of history around how those works were legally used -- which also raises a concern about "laches" or how timely these lawsuits are. The RIAA has had decades to complain about these practices, and is just doing so now...

And, of course, remember that this is all happening just a month or so after the publishing arms of the very same labels were found to have been colluding unfairly to jack up Pandora's rates. Basically, the legacy recording industry players are now looking for just about any way possible to make Pandora pay even more. This isn't a surprise. It's how the industry has always worked. When they're struggling to figure out ways to make money, they look at anyone successful and assume it's their fault that the legacy players are making less money. So, rather than innovating, they try to find legal ways to force more money out of the innovators and into their own hands. This is just the latest example in a very long line of such cases.

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]]>after losing on trying to shake them downhttps://www.techdirt.com/comment_rss.php?sid=20140418/04085126953Wed, 16 Apr 2014 08:10:00 PDTRecording Industry Wants To Have It Both Ways When It Comes To Pre-1972 RecordingsMike Masnickhttps://www.techdirt.com/articles/20140415/07051726917/recording-industry-wants-to-have-it-both-ways-when-it-comes-to-pre-1972-recordings.shtml
https://www.techdirt.com/articles/20140415/07051726917/recording-industry-wants-to-have-it-both-ways-when-it-comes-to-pre-1972-recordings.shtmlpre-1972 sound recordings. When Congress wrote the 1909 Copyright Act, it did not cover sound recordings, because Congress didn't think that sound recordings qualified for copyright. In a statement released by Congress with the Act, it said it deliberately chose not to cover sound recordings, believing that they weren't covered by the Constitutional limitation on "writings" for copyright protection:

Indeed, the report released with the Copyright Act expressly stated that Congress did not intend to protect sound recordings: "It is not the intention of the committee to extend the right of copyright to the mechanical reproductions themselves, but only to give the composer or copyright proprietor the control, in accordance with the provisions of the bill, of the manufacture and use of such devices." According to one commentator, Congress had two principal concerns about sound recordings, leading it to decline to protect them. First, Congress wondered about the constitutional validity of such protection. The Constitution allows Congress to protect "writings," and Congress was uncertain as to whether a sound recording could constitute a writing. Second, Congress worried that allowing producers to exclusively control both the musical notation and the sound recording could lead to the creation of a music monopoly.

That latter concern certainly was prescient. When Congress did a massive overhaul of copyright law in 1976, the recording industry was a much more powerful lobby, and so sound recordings were included. However, in the years between 1909 and 1976, many states had created their own (often bizarre) "state" copyrights to protect recordings. Rather than deal with this in an intelligent way, Congress basically said the new federal copyright rules would only apply to songs recorded in 1972 or after, and pre-1972 recordings would remain in a bizarre limbo. This has created a whole host of legal issues, and the Copyright Office has been trying to figure out what to do about this for years.

However, it appears that the recording industry would like it both ways. When it's to their advantage, they claim that pre-1972 recordings should be treated just like modern song recordings. And when it's not to their advantage, they insist that pre-1972 recordings should be treated wholly differently. In various hearings about the issue, the RIAA has been one of the most vocal in arguing against treating pre-1972 recordings as if they're covered by federal copyright law. And, at the same time, they've argued in court repeatedly that the DMCA safe harbors don't apply to pre-1972 recordings, making various music storage lockers liable for any such recordings they host. Some courts have rejected this theory, while others have accepted it. Either way, the recording industry has been pretty adamant that pre-1972 recordings should be treated differently, so they can sue whomever they want.

And yet... when various streaming music companies recognize this fact, and note that pre-1972 recordings aren't covered under statutory licensing regimes... the recording industry freaks out. Michael Huppe, the President of SoundExchange -- an organization created by the RIAA -- is writing in Billboard magazine about how unfair it is that streaming services like Sirius XM and Pandora don't pay statutory rates for pre-1972 recordings. Huppe complains that "this is not fair" and notes:

It's a matter of simple fairness to offer equal treatment for all sound recordings.

Okay. If that's true, then why aren't SoundExchange and the RIAA out there in support of federalizing the copyright in pre-1972 recordings? Why aren't SoundExchange and the RIAA agreeing to the fact that the DMCA's safe harbors apply equally to pre-1972 recordings? I'm all for "equal treatment for all sound recordings" as well, but someone ought to point out to SoundExchange and the RIAA: you first.

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]]>are-they-the-same-or-different?https://www.techdirt.com/comment_rss.php?sid=20140415/07051726917Tue, 25 Mar 2014 09:26:17 PDTJudge Highlights Bogus Collusion By ASCAP, Publishers In Rejecting Their Attempt To Jack Up Pandora's RatesMike Masnickhttps://www.techdirt.com/articles/20140323/07554026662/judge-highlights-bogus-collusion-ascap-publishers-rejecting-their-attempt-to-jack-up-pandoras-rates.shtml
https://www.techdirt.com/articles/20140323/07554026662/judge-highlights-bogus-collusion-ascap-publishers-rejecting-their-attempt-to-jack-up-pandoras-rates.shtmlcollusive. ASCAP had already lost an earlier ruling showing that it had violated its consent decree by letting publishers selectively remove certain works in order to force Pandora into paying much, much higher rates. However, the details of ASCAP and the publishers' deception became much clearer during the rate court battle. Last week, the judge handed ASCAP a huge loss, keeping the rate where it had been, at 1.85%, rather than jacking it up to ASCAP's requested 3%.

The ruling clearly highlights just how obnoxious the publishers and ASCAP acted throughout this process, and how their actions not only were intended to harm Pandora, but also the very songwriters that ASCAP pretends to represent. ASCAP has done an amazing propaganda job of pretending that it's always looking out for songwriters -- when the simple fact is that it focuses on benefiting its giant publishers, often at the expense of songwriters. The key issue in this whole action was how ASCAP allowed publishers to selectively "withdraw" their rights from ASCAP and then effectively hold a gun to Pandora's head, saying that if Pandora didn't accept a new license directly with those publishers, it would be infringing (to make this work, the publishers also refused to even let Pandora know which songs had been withdrawn). ASCAP effectively encouraged this to happen, knowing that it could use this to jack up its own rates, even though, on its face, publishers withdrawing rights from ASCAP should be seen as bad for ASCAP. But withdrawing from ASCAP (even though ASCAP effectively encouraged it) is also bad for songwriters because the publishers aren't exactly good at paying songwriters (shocking), whereas at least ASCAP has some level of transparency. Even the judge highlighted the songwriters and publishers' interests here were not aligned, but ASCAP was still siding with the publishers.

But the really damning stuff comes from the things we highlighted earlier during the trial -- and the judge found those points quite damning. There was clear collusive behavior between the publishers and ASCAP, meaning that ASCAP's claims that those "independently" negotiated deals were not done in a true marketplace. It started with ASCAP boss, Paul Williams, trying to calm down angry songwriters, but flat out admitting that these "withdrawals" were all really about getting higher rates for everyone:

The large publishers were well aware of the discomfort that
at least some writers felt with the new media withdrawals and
made the following argument to convince them to come on board:
if the major publishers could get higher license rates by direct
negotiations with new media companies outside of ASCAP then
those rates could be used in rate court litigation to raise the
ASCAP license fees. The publishers found an ally on this issue
in writer and ASCAP chairman Williams, who agreed with the new
media rights withdrawal strategy. His email illustrates the
strategy he pursued to get writers to support the publishers’
partial withdrawal of rights from ASCAP:

My job is to make this transition as smoothly as
possible in the board room . . . to assuage the fears
of the writers who may see this as an ASCAP death
knoll . . . . [W]e are in fact giving [the major
publishers] the right to negotiate. The end result
being that they will set a higher market price which
will give us bargaining power in rate court.

In other words, far from real competition and a market rate, Williams was flat out admitting that he was encouraging publishers to leave his own organization, making life more difficult for the songwriters he claims to represent, just so they could set up these sham agreements (negotiated with a gun to Pandora's head) and then pretend there was a higher "market rate" to use at the rate court.

This kind of behavior went to extreme levels, with Universal Music more or less threatening Pandora's lawyers with mafioso like claims, and then immediately emailing ASCAP folks, to talk about how the strategy of jacking up the rates was working, and how ASCAP should be strong, since Pandora was supposedly running scared and would settle quickly. This, you'll note, is not the behavior you'd see in a competitive market. It's the behavior of organizations colluding against Pandora.

The day after the
rate court filing, UMPG’s Horowitz called one of Pandora’s
attorneys at Greenberg Traurig. As Horowitz promptly
memorialized in an email to ASCAP’s LoFrumento, Horowitz

told [Pandora’s outside counsel], as a “friend” of the
firm, that I thought both the firm and Pandora are
completely tone deaf. That whether his firm has the
legal right to rep Pandora in litigation, the firm has
lost huge goodwill with writers and artists by doing
so. And that filing now for a rate court proceeding
against ASCAP . . . had the effect of unifying
artists, writers, and PROs against Pandora.

Horowitz also gave some advice to LoFrumento regarding
ASCAP’s negotiating stance with Pandora. His advice boiled down
to two words: be strong. Horowitz wrote:

My take: [Pandora’s outside counsel] and Pandora are
scared. They just want to settle with ASCAP and
settle fast. Be strong. Time is on your side.
Pandora is now under intense pressure to settle with
ASCAP. They have to put this behind them. You can
really push Pandora and get a much better settlement
as a result. They are reeling. They will pay more, a
lot more than they originally intended, to do that.

Horowitz forwarded this same email to other ASCAP board members,
including Sony’s Martin Bandier, and BMG Music Publishing’s
Laurent Hubert. Besides these ASCAP Board members, Horowitz
sent the email to David Israelite of the National Music
Publishers Association (“NMPA”), which is a music industry trade
group based in Washington, D.C. LoFrumento assured Horowitz
that he was approaching Pandora with the mindset Horowitz
advocated.

In other words, this was all a coordinated effort, rather than actual market competition. The ruling further confirms the fact, as Pandora had publicly stated, that ASCAP and Pandora had actually agreed to terms on a rate, and then ASCAP backed out of the deal, suddenly demanding much, much higher rates, leaving Pandora in a difficult spot at the last minute on some negotiations.

Either way, the judge makes it quite clear that he views ASCAP's activities as "coordinated" with the major publishers, rather than any sort of independent competitive market, as ASCAP had tried to tell the judge. Furthermore, the judge notes that the publishers, along with ASCAP, put Pandora in an impossible "gun to the head" kind of situation to agree to massive increases to the publishers, by withholding the list of songs that would soon be "infringing" if Pandora didn't agree to a much higher deal.

With only a few business days remaining in the year 2012, ASCAP refused to provide Pandora
with the list of Sony works without Sony’s consent, which Sony
refused to give. Without that list, Pandora’s options were
stark. It could shut down its service, infringe Sony’s rights,
or execute an agreement with Sony on Sony’s terms. Then,
despite executing a confidentiality agreement with Pandora, Sony
made sure that UMPG learned of all of the critical terms of the
Sony-Pandora license. And LoFrumento admitted at trial that
ASCAP expected to learn the terms of any direct license that any
music publisher negotiated with Pandora in much the same way.

[....] What is important is
that ASCAP, Sony, and UMPG did not act as if they were
competitors with each other in their negotiations with Pandora.
Because their interests were aligned against Pandora, and they
coordinated their activities with respect to Pandora, the very
considerable market power that each of them holds individually
was magnified.

The judge certainly finds Sony and ASCAP's behavior in withholding the list of songs it was withdrawing from Pandora incredibly suspect, and further that the testimony from Sony's representative was simply "not credible" on this issue.

Brodsky received this request for a list of the Sony works,
but never responded. In their telephone conversations during
the month of November, Rosenbloum reiterated the request for a
list of works on several occasions but never got any response.
Rosenbloum repeated the request once more at a breakfast meeting
that he and Pandora’s Kennedy had with Sony’s Brodsky and
Bandier on November 30. Again, Sony did not respond.

The list of Sony works was potentially important for
several purposes, and Pandora referred to those several purposes
in its discussions with Sony. In addition to wanting to be able
to remove the Sony works from its service if Pandora and Sony
could not come to terms, Pandora needed the list so that it
could understand how to apportion any payments between the EMI
and Sony catalogues since the payments would apparently be made
at two different rates. Pandora also wanted the list so it
could evaluate whether the substantial, non-refundable advance
that Sony was demanding would likely be recouped.

Sony had a list readily at hand, since the Compendium
required that a publisher and ASCAP work together during the 90
day period before the effective withdrawal date to confirm
precisely which works were being withdrawn. Sony understood
that it would lose an advantage in its negotiations with Pandora
if it provided the list of works and deliberately chose not to
do so. Brodsky’s explanation at trial that he did not provide
the list because he believed that negotiations were proceeding
smoothly and did not want to impose an unnecessary “burden” on
Sony’s staff is not credible. The negotiations were not going
smoothly; the list had already been prepared and its production
imposed no burden. As Brodsky recognized in his testimony, the
list was “necessary” to Pandora in the event the parties did not
reach a deal. Sony decided quite deliberately to withhold from
Pandora the information Pandora needed to strengthen its hand in
its negotiations with Sony.

The judge recounts how Pandora also tried to get the list from ASCAP directly, and ASCAP after conferring with Sony similarly refused to give Pandora the list. The ruling also details how when ASCAP broke the handshake agreement it had with Pandora, it basically left Pandora less than a week to come to terms with Sony or be at risk for huge liability for playing Sony songs that it couldn't remove since no one would give it a list. In other words, Pandora was given effectively less than 5 days to negotiate a deal with Sony, without even knowing the basic information it needed to know. When Pandora further asked for the list just so it could figure out how much of its music database would be covered by Sony's license, Sony again refused to give the list, but just said that about 30% of the music consisted of Sony and EMI combined.

Then there's the fact that Sony officials then leaked information about the deal terms all over the place, despite a confidentiality agreement.

By mid-January 2013, and despite the existence of a
confidentiality agreement, Sony leaked the key terms of the
Pandora license to the press. The headlines in three articles
said it all: “Sony/ATV ‘Now Has the Power to Shut Pandora
Down…’”; “Sony/ATV gets 25 percent increase in Pandora
royalties”; and “Sony/ATV’s Martin Bandier on new ‘quite
reasonable’ Pandora deal.” A New York Post article featured a
photograph of Sony’s Bandier in shirt sleeves with a large cigar
in his mouth, as it reported that Sony had “wrangled a 25
percent increase in royalties” for a one year license.

Although Brodsky denied knowing that anyone at Sony had leaked
the terms of the license to the press, the evidence is that Sony
did just that. Despite reporting dutifully that Sony had
“declined” to comment on the terms of the deal, the articles
referred to anonymous industry insiders as their source and
quoted Bandier’s analysis of the deal. While Pandora had
absolutely no interest in seeing the 25% hike in its rates known
to other licensors, Sony hoped that its rate would be a jumping
off point for the next publisher’s negotiations with Pandora,
and it was. Pandora had its attorneys call Sony to complain of
the breach of their confidentiality agreement.

The whole ruling is quite a read. It shows over and over again how ASCAP and the big publishers basically did everything possible to collude and screw over Pandora, potentially harming songwriters in the process, by giving those songwriters less clarity and less information about licensing rates and how much they were owed. The claim from Universal that Pandora would regret going to rate court doesn't seem to have come about, as it's the publishers and ASCAP itself that have come out of this whole process with a massive black eye.

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]]>mafioso-techniqueshttps://www.techdirt.com/comment_rss.php?sid=20140323/07554026662Wed, 12 Feb 2014 08:59:00 PSTSurprise: ASCAP and Music Labels Colluded To Screw PandoraMike Masnickhttps://www.techdirt.com/articles/20140209/01061226149/details-come-out-about-how-ascap-colluded-with-labels-to-screw-pandora.shtml
https://www.techdirt.com/articles/20140209/01061226149/details-come-out-about-how-ascap-colluded-with-labels-to-screw-pandora.shtmlturn 100 years old. ASCAP was the original music collection society in the US, and over the years we've detailed just how out of touch and obsolete it has become, basically harming independent artists to help rock stars. At the same time, it has bizarrely lashed out at Creative Commons, and when Larry Lessig offered to debate ASCAP boss (and famed songwriter) Paul Williams, Williams refused while claiming it was all an attempt to silence ASCAP.

Yet, in the last few years, we've been covering the incredible and bizarre legal fight between ASCAP and Pandora, which has seen ASCAP stoop to amazing lows. You can read some of the basic background in some of our previous posts. A key part of this was that the major labels, key members of ASCAP, suddenly started "dropping out" of ASCAP in order to do licensing directly. At first we thought this was a sign of how the labels might be realizing that ASCAP was obsolete and out of touch, but it has since become clear that these "removals" were all something of a scam to force Pandora into higher rates.

What happened was that ASCAP and Pandora had first negotiated a higher rate than Pandora had agreed to in the past -- reaching a handshake agreement. However, before that agreement could be finalized, these labels started "withdrawing" from ASCAP in order to negotiate directly. As part of that, both ASCAP and the labels refused to tell Pandora which songs had been withdrawn, meaning that if Pandora accidentally played one of the withdrawn songs (again, without knowing which songs were withdrawn), it would face massive copyright infringement liability. With its back to the wall, Pandora was forced to agree to much, much higher rates with those labels who had "withdrawn" their songs -- and then those labels magically put their songs back in ASCAP... and then ASCAP claimed that those newly "negotiated" deals represented "true market" deals, and argued that in an open market, it deserved those kinds of crazy high royalty rates. Pandora pointed out that this pretty clearly violated the antitrust decree against ASCAP -- an argument that Pandora won in the first round.

The case is moving forward, and many more details have been revealed, highlighting just how slimy ASCAP and the major labels have been about this. It makes it quite clear that the "withdrawals" were never actually about the labels withdrawing their music from ASCAP, but what certainly looks like collusion to have labels "withdraw," put a gun to Pandora's head, get them to agree to massively higher rates to avoid a lawsuit, and then feed that info back to ASCAP, which would continue "managing" the songs, even though they had been "withdrawn."

This comes clear in Paul Williams' deposition. Given that all these major labels were apparently "withdrawing" all of their digital rights, you might think (1) that ASCAP would be upset since it was losing all its key labels and (2) that Williams might look at reducing the cost of his licenses, since apparently they would no longer have all these important songs. Not so. From the trial transcript, here's Pandora's lawyer explaining how Williams responded when they asked him about it at his deposition:

"Did you ever consider that ASCAP could charge a lower price and try to get more people to use the works left in ASCAP rather than have users use the higher priced EMI repertoire?"

"Answer: Never once did that occur to me."

In other words, it was all about raising the rates. It was not about competition.

On top of that, it details how, even as these labels were "withdrawing," representatives from those very same labels/publishers still sat on ASCAP's board. As for that issue of the labels and ASCAP refusing to reveal what songs were being withdrawn, more evidence has come out during the case, showing that this was all part of the plan between the labels and ASCAP. In fact, they joked about it over email, which has now come out. During the opening, Pandora's lawyer told the story of Pandora seeking information about what songs were being withdrawn by Sony.

Your Honor, by the time Pandora asked for this information on November 1st, both ASCAP and Mr. Brodsky [Sony Executive VP] had in their possession this very list. The deposition testimony from ASCAP was that this list as is could have been delivered to Pandora within 24 hours were it only to get the go-ahead from Sony to do so. ASCAP never received the go-ahead.

We cited much of the internal back-and-forth on this in our briefs... My favorite is the following exchange between Mr. DeFilippis and Mr. Reimer of ASCAP on December 19th, 2013, PX 193. You see the question being asked by Mr. DeFilippis: why didn't Sony provide the list to Pandora?

Mr. Reimer's response: Ask me tomorrow.

Mr. DeFilippis: Right. With drink in hand.

And the inference here is just incredible. This data was sitting there, your Honor, and nobody was willing to give it to Pandora.

There's a lot more in there, but it seems abundantly clear that these labels "withdrawing" from ASCAP had nothing to do with competition or market rates. It appears that it had little to do with even withdrawing from ASCAP. Instead, it seems to have been designed from the start to basically screw over Pandora, in what certainly smells an awful lot like collusion, by forcing Pandora to pay exorbitant rates or suddenly face a massive copyright liability because no one would tell them what songs were being "withdrawn" from an existing licensing agreement. Then, ASCAP and the other labels could turn around and use those "agreements" pretending they represented a "market rate" to argue for higher rates at the Copyright Royalty Board, which is supposed to try to come up with a "market rate" for various licenses (even though the high rates were supposed to have a confidentiality agreement tied to them).

Considering ASCAP's previous antitrust problems, this certainly looks... incredibly sketchy. And then it's ASCAP going around claiming that Pandora is somehow trying to game the system? The whole thing is incredible, and paints a really nasty looking portrait of the highly questionable games that ASCAP and the major labels/publishers played to try to force ridiculously high licenses on Pandora by setting up fake competition, and putting a gun to Pandora's head.

ASCAP has often come across as sleazy in the past, but the details coming out at this trial take it to a whole new level.

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]]>incrediblehttps://www.techdirt.com/comment_rss.php?sid=20140209/01061226149Fri, 8 Nov 2013 13:24:00 PSTBilly Bragg Says Don't Blame Spotify; Blame The Record LabelsMike Masnickhttps://www.techdirt.com/articles/20131107/16343725173/billy-bragg-says-dont-blame-spotify-blame-record-labels.shtml
https://www.techdirt.com/articles/20131107/16343725173/billy-bragg-says-dont-blame-spotify-blame-record-labels.shtmlhatred towards successful internet music services lately, with the main targets being the most successful: Spotify and Pandora. Could those services be doing better? Yes, absolutely, but so much of the the hatred seems incredibly misplaced. Here are services that are actually paying artists, and that have built platforms that millions upon millions of people love. Many of the complaints about the "low payout" numbers involve people totally misunderstanding the data as well. But there's also been one elephant in the room which hasn't received as much attention: Spotify and Pandora pay the record labels, since they hold the copyright. Often, a big part of the problem is that the labels then do everything to avoid paying the artists.

In the past, I've disagreed with singer Billy Bragg's view of internet services, but this time around, he's right: in many cases, the real problem (yet again) are the labels and not these services. He's written a detailed Facebook post explaining this position, noting that complaining about Spotify is like "campaigning against the Sony Walkman" when it was first introduced. Going against what music fans want is never a good strategy.

From there, he gets to the real issue: how the labels account for streaming revenue:

The problem with the business model for streaming is that most artists still have contracts from the analog age, when record companies did all the heavy lifting of physical production and distribution, so only paid artists 8%-15% royalties on average.

Those rates, carried over to the digital age, explain why artists are getting such paltry sums from Spotify. If the rates were really so bad, the rights holders - the major record companies - would be complaining. The fact that they're continuing to sign up means they must be making good money.

Here in Sweden - where I'm doing a show tonight in Malmo - artists have identified that the problem lies with the major record labels rather the streaming service and are taking action to get royalty rates that better reflect the costs involved in digital production and distribution. UK artists would be smart to follow suit.

Of course, there have already been lawsuits about similar issues, related to legacy contracts. You hopefully remember Eminem's big lawsuit over whether or not digital sales count as licenses or sales, since "licenses" involve a 50% cut, while "sales" are more like 10 to 15%. As the Guardian article notes, there are some labels that do in fact pay a greater percentage on streaming deals, as they should, but many legacy artists are locked into bad contracts. And, of course, there's always the issue of how well the labels actually handle their accounting, and the way they play games to make sure artists never "recoup," making it difficult to get any royalties.

The internet services definitely can do more to help artists, but much of the blame often seems misplaced, so it's great to see someone like Bragg recognizing that.

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]]>there we gohttps://www.techdirt.com/comment_rss.php?sid=20131107/16343725173Thu, 19 Sep 2013 15:51:39 PDTCourt Says ASCAP Can't Selectively Remove Songs From The Blanket License It Gives PandoraMike Masnickhttps://www.techdirt.com/articles/20130918/17441824577/court-says-ascap-cant-selectively-remove-songs-blanket-license-it-gives-pandora.shtml
https://www.techdirt.com/articles/20130918/17441824577/court-says-ascap-cant-selectively-remove-songs-blanket-license-it-gives-pandora.shtmlwar on Pandora has reached some really ridiculous levels, especially as ASCAP has continually tried to pretend that Pandora was trying to stiff artists. The details suggested something entirely different. After staying quiet for a while, Pandora finally highlighted the true story, which showed that the claims about Pandora were completely bogus. It was actually ASCAP who was playing sick games with Pandora, trying to remove the right to play certain songs, without even letting Pandora know which songs.

Historically, Pandora has paid essentially the same rate as all other forms of radio, a rate established unilaterally by the performing rights organizations, ASCAP and BMI, in the late 1990s. In November of last year, following a lengthy negotiation, Pandora agreed with ASCAP to a new rate, an increase over the prior amount, and shook hands with ASCAP management. Not only was our hand-shake agreement rejected by the ASCAP board, but shortly thereafter we were subjected to a steady stream of “withdrawals” by major publishers from ASCAP and BMI seeking to negotiate separate and higher rates with Pandora, and only Pandora. This move caused us to seek the protection of the rate, also recently negotiated, enjoyed by the online radio streams of broadcast radio companies. It’s important to note that these streams represent 96% of the Internet radio listening hours among the top 20 services outside of Pandora (talk about an un-level playing field). We did not enter this period looking for a lower rate – we agreed to a higher rate. But in a sad irony, the actions of a few small, but powerful publishers seeking to gain advantage for themselves has caused all songwriters’ royalties to go down. Any characterization of Pandora as being out to cut publishing rates flies in the face of the facts.

And while not highlighted there, Pandora also noted that ASCAP refused to let Pandora know which tracks were being withdrawn, leading to uncertainty over potential liability if it played the wrong track:

During negotiations, ASCAP and the publisher increased the pressure by refusing to provide Pandora the list of tracks that were being withdrawn, exposing Pandora to copyright infringement liability of up to $150,000 per work. At Pandora’s scale, such liability would be enormous.

As we noted at the time, this appeared to be in direct violation of a long-term antitrust agreement ASCAP has with the DOJ, given ASCAP's massive market power. Some in our comments suggested it was crazy to suggest this move violated the antitrust agreement, but a court has basically ruled strongly in favor of Pandora, noting that it goes against the agreement to selectively remove songs from the blanket license, and allowing Pandora to continue to stream such songs. Basically, the court rules that the consent decree from the antitrust fight means that ASCAP can't divide up the various copyrights to separate out things like "new media rights," but rather if it has a song in its catalog, it must license it under its blanket license.

ASCAP’s argument is predicated on the Copyright doctrine of “divisibility of rights” within a copyrighted work. It is true that “[t]he Copyright Act confers upon the owner of a copyright a bundle of discrete exclusive rights, each of which may be transferred or retained separately by the copyright owner.” But while the Copyright Act allows rights within works to be alienated separately in general, [the consent decree] imposes restrictions beyond those imposed by the Copyright Act on ASCAP. [The consent decree denies] ASCAP the power to refuse to grant public performance rights to songs to particular users while, at the same time, retaining the songs in question in its repertory.

I await ASCAP's next press release insisting that Pandora is the one playing games....

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]]>some-sensehttps://www.techdirt.com/comment_rss.php?sid=20130918/17441824577Mon, 29 Jul 2013 19:35:03 PDTASCAP Asks FCC To Block Pandora From Buying Radio Station, Because ASCAP Doesn't Like PandoraMike Masnickhttps://www.techdirt.com/articles/20130729/13213223990/ascap-asks-fcc-to-block-pandora-buying-radio-station-because-ascap-doesnt-like-pandora.shtml
https://www.techdirt.com/articles/20130729/13213223990/ascap-asks-fcc-to-block-pandora-buying-radio-station-because-ascap-doesnt-like-pandora.shtmllashed out at Pandora for buying a small radio station. As we noted, Pandora was doing this to more or less highlight the absolute hypocrisy (and possible illegality) of ASCAP who offers cheaper streaming rates for terrestrial radio stations to stream their programming online. Since this stuff gets a bit confusing, as a reminder, ASCAP (along with others like BMI and SESAC) collect and distribute money for composers and publishers, not for musicians playing the music (though, obviously, sometimes the composers also play). ASCAP has a variety of different rates that it charges for things, and Pandora noted that its online competitors, such as iHeartRadio -- which is owned by ClearChannel, the largest owners of terrestrial radio stations in the US -- pay a lower rate for online streaming.

ASCAP has been offering iHeartRadio and other terrestrial stations that also do streaming cheaper licenses for their streaming than it offers to Pandora. Pandora has argued that this violates the antitrust agreement that the DOJ made ASCAP agree to, after it was discovered that ASCAP was engaged in a variety of anti-competitive practices to restrict the market.

The hysteria over this from some less-than-well-informed folks in the music industry has really been quite incredible. Contrary to some claims that we've seen, Pandora is not trying to get a special deal. Nor is it trying to say that it doesn't have to pay performer rights (which are a whole different issue). All it's really doing is highlighting how ASCAP is discriminating against online-only streaming services by charging them different rates than online streaming services that happened to be owned by terrestrial radio stations.

Pandora is buying KXMZ for one reason – to argue that it is entitled to pay lower music
performance royalties to composers, songwriters and lyricists for its billions of online-only
internet music streams.

Actually, it seems like Pandora is buying KXMZ to demonstrate that ASCAP has discriminatory and unfair pricing practices in how it offers its licenses. It's not that Pandora is claiming that it alone is magically entitled to lower royalties -- it's pointing out that everyone else gets lower royalties and Pandora is wondering why it is singled out for higher royalties.

Honestly, that's about the extent of ASCAP's argument. Beyond that, it focuses on some procedural issues about the paperwork that Pandora filled out -- ASCAP claims they didn't follow all the rules. But, clearly, ASCAP doesn't go around making sure that everyone buying radio stations has dotted their i's and crossed their t's. ASCAP is just upset that Pandora is suddenly calling attention to ASCAP's discriminatory online streaming rates. Even on the technicalities ASCAP is being particularly ridiculous. For example, it claims that Pandora did not properly disclose its ownership, because it claims that Pandora improperly referred to Wellington Management Company as "an investment adviser" in the past, but for this document, refers to it as "an investment company." That's the sort of minutiae ASCAP is pulling out to try to block this.

The whole thing is petty in the extreme. ASCAP clearly has discriminatory pricing practices against online-only streaming companies -- and is embarrassed by Pandora making this point very clearly by purchasing this tiny radio station. Is it a move to "game" the system? Yes, it is but a move necessitated by ASCAP's discriminatory pricing. If ASCAP is so upset about this, perhaps it shouldn't have priced internet streaming differently depending on whether or not you own a radio station.

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]]>because reasonshttps://www.techdirt.com/comment_rss.php?sid=20130729/13213223990Wed, 10 Jul 2013 11:42:07 PDTIn What World Is Having Three Judges Set The Price Of Streaming Music 'Free Market Capitalism'?Mike Masnickhttps://www.techdirt.com/articles/20130709/16233923750/what-world-is-having-three-judges-set-price-streaming-music-free-market-capitalism.shtml
https://www.techdirt.com/articles/20130709/16233923750/what-world-is-having-three-judges-set-price-streaming-music-free-market-capitalism.shtml"Pandora's PR problem" concerning its attempt to get out from under ridiculously draconian royalty rates that are clearly unsustainable. I agree that Pandora has failed on almost every aspect of the PR front, though the article seems seriously one-sided on a few points. First, it compares Pandora's situation to Spotify's, where Spotify has also been criticized for its royalty rates at times, and yet its reputation isn't quite as bad. Recently Spotify has signed some "big" name artists to publicly support its platform. Of course, the way it did so was to throw a ton of money at those artists. And there's a strong argument that Spotify's current royalty rates are even more unsustainable than Pandora's -- it's just that Spotify has a long runway and is choosing to put off the eventual day of reckoning it's going to have to face over royalty rates for internet music. Furthermore, the article seems to ignore the fact that much of the "controversy" and PR failures by Pandora are actually the result of a coordinated campaign, set up by a RIAA front group, focused on flat out lies and bogus attacks.

Of course, Pandora isn't blameless in all of this, but I put a lot of blame on Pandora's stupid decision back in 2009 to agree to the ridiculous rates it now realizes are impossible to sustain (something that many people pointed out at the time). But, the craziest part of the article is the claim that Pandora's attempt to lower rates somehow goes against free market capitalism. Sandoval mentions this argument twice. First, in noting that some "conservative" groups made this argument:

Citizens Against Government Waste, a conservative think tank, accused Pandora of trying to undermine the free market.

And then again in quoting an analyst who makes the same argument:

Michael Pachter, a research analyst with Wedbush Securities, believes Pandora will eventually thrive but that its attempt to legislate lower costs is misguided. "The bill is idiotic," Pachter said. "It's insulting to Congress to say you want regulation to lower your costs at the expense of artists. Did you see who was on stage with Obama helping him campaign? Jay-Z and Bruce Springsteen. That's the Democrats, and how many Republicans are going to want to legislate against capitalism and the free market?"

But neither of those claims makes any sense at all. When it comes to royalty rates for web streaming there is no free market. In fact, the status quo is so far away from the free market or capitalism as to be laughable, and it seems like anyone claiming that it represents some sort of free market is either being purposely misleading or is totally uninformed.

The rates for web streaming sites like Pandora fall under what's called "non-interactive digital music streaming" -- and the rates for those are set by a three judge board, known as the Copyright Royalty Board. If someone can explain to me how a selection of three judges flat out setting prices is a "free market," that would be good to know, because last I checked, the government setting prices is kind of the opposite of a free market. Of course, the last time the CRB set those rates, they set them so high that it was impossible for anyone to pay those rates. That's how completely clueless the CRB tends to be. So, in response, Pandora and other webcasters did negotiate lower rates, but those rates were still impossibly high. Some might argue since Pandora's current rates are those "negotiated" rates, it is a free market, but that's clearly not true either. The "fallback" that the record labels had in those negotiations was "fuck you, here's what the CRB says the rates are, pay up or go out of business." When they have those CRB rates as the fallback, their negotiating position is obviously quite strong, and the results are obvious. The "negotiated" rates are impossibly high. Pandora's big mistake was agreeing to those rates (even though it felt it needed to if it wanted to actually live to fight another day).

No matter how you look at it, that's not free market capitalism. Coming up with a way to change those rates may not be free market capitalism either, but to argue that moving away from the existing rates goes against free market capitalism makes no sense. So, if either Citizens Against Government Waste or Michael Pachter can explain how three out of touch judges with no market experience setting the official rates is "free market capitalism," it seems like, perhaps, they shouldn't argue that Pandora is trying to "legislate against capitalism and the free market."

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]]>just-wonderinghttps://www.techdirt.com/comment_rss.php?sid=20130709/16233923750Thu, 27 Jun 2013 08:42:38 PDTPandora's Fed Up With The Lies The RIAA Has Been Spreading About It: Presents Some FactsMike Masnickhttps://www.techdirt.com/articles/20130626/17153923629/pandoras-fed-up-with-lies-riaa-has-been-spreading-about-it-presents-some-facts.shtml
https://www.techdirt.com/articles/20130626/17153923629/pandoras-fed-up-with-lies-riaa-has-been-spreading-about-it-presents-some-facts.shtmlturning up the attacks on Pandora, the hugely successful internet service that already pays significantly more in royalties than pretty much anyone else out there. This strategy is very much in the RIAA's tradition of attacking any successful internet company in the belief that 100% of the benefits of any successful internet company should flow to the RIAA.

In this case, the RIAA and its front groups have done a masterful job of misleading a group of artists into parroting RIAA talking points pretending that Pandora's royalties are too low, not too high. Most of these claims are based on a either base ignorance, or conscious deception, often focused on comparing apples to oranges. In some cases, this involves comparing totally different businesses (like Pandora to retailers), or, at times, it means comparing Pandora's "per play" royalties to the "per play" royalties of other services like terrestrial radio or satellite radio. Of course, that's insanely misleading, because the real metric is never "per play," but per listener. With Pandora, a single play is to a single listener (or, possibly a few people in a room or a car). But, terrestrial and satellite radio plays are broadcast, meaning that they usually have tens or even hundreds of thousands of listeners per play. Comparing "per play" rates is just a really dumb metric. There's a separate issue in terms of how some have misrepresented the various payments, implying that Pandora's payments are much, much lower than they really are -- something that an eager media picked up on without even the slightest bit of fact checking.

It would appear that Pandora has finally had enough of the smear campaign and the attacks and has posted a detailed response to these attacks, highlighting how wrong almost every talking point has been concerning Pandora, and how this level of dialogue has done a lot more harm than good.

The first falsehood being disseminated is that Pandora is seeking to reduce artist royalties by 85%. That is a lie manufactured by the RIAA and promoted by their hired guns to mislead and agitate the artist community. We have never, nor would we ever advocate such a thing. I challenge the RIAA to identify a statement from Pandora that says we seek to reduce royalties by 85%. On the contrary, all of the key principals including Cary Sherman (the head of the RIAA) and Mike Huppe (the head of SoundExchange) know that we have been advocating for solutions that would grow total payments to artists. The 85% sound bite preys upon the natural suspicions of the artist community, but it is simply untrue. And although we compete directly with AM/FM radio, which pays zero performance royalties, we have always supported fair compensation to artists.

It has also hit back on the claim that Pandora has been seeking to cut songwriter fees, explaining that it had come to a direct agreement with ASCAP on higher fees, and then ASCAP went back on the agreement and started playing games -- such as withdrawing tracks, but refusing to tell Pandora which tracks, such that it risked huge statutory fines if it played the wrong tracks. For all of ASCAP's claims that it is protecting artists, the reality looks like it was harming artists' best interests in trying to kill Pandora:

The next issue concerns the publishing side. Historically, Pandora has paid essentially the same rate as all other forms of radio, a rate established unilaterally by the performing rights organizations, ASCAP and BMI, in the late 1990s. In November of last year, following a lengthy negotiation, Pandora agreed with ASCAP to a new rate, an increase over the prior amount, and shook hands with ASCAP management. Not only was our hand-shake agreement rejected by the ASCAP board, but shortly thereafter we were subjected to a steady stream of “withdrawals” by major publishers from ASCAP and BMI seeking to negotiate separate and higher rates with Pandora, and only Pandora. This move caused us to seek the protection of the rate, also recently negotiated, enjoyed by the online radio streams of broadcast radio companies. It’s important to note that these streams represent 96% of the Internet radio listening hours among the top 20 services outside of Pandora (talk about an un-level playing field). We did not enter this period looking for a lower rate – we agreed to a higher rate. But in a sad irony, the actions of a few small, but powerful publishers seeking to gain advantage for themselves has caused all songwriters’ royalties to go down. Any characterization of Pandora as being out to cut publishing rates flies in the face of the facts.

And, amazingly, the RIAA and others have been successful in spinning this, falsely, into saying that Pandora was looking to cut back on what it paid songwriters.

The depths to which the RIAA has sunk in its attacks on Pandora are really quite despicable, but it's par for the course for them. Anything successful in the music space created "outside" the record labels is bad and somehow "building on the backs of our copyrights." They won't rest until they've killed each off. The past decade and a half are littered with the remains of internet and tech companies who built great products in the music space that fans loved, each one systematically killed by the major record labels and the RIAA, who demand ever higher royalties.

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]]>let's-rethink-thishttps://www.techdirt.com/comment_rss.php?sid=20130626/17153923629Fri, 21 Jun 2013 09:50:43 PDTRIAA Lobbyists Turn Anti-Pandora Desperation Level Up To 11Mike Masnickhttps://www.techdirt.com/articles/20130619/00354723523/riaa-lobbyists-turn-anti-pandora-desperation-level-up-to-11.shtml
https://www.techdirt.com/articles/20130619/00354723523/riaa-lobbyists-turn-anti-pandora-desperation-level-up-to-11.shtmlillegally), pretending to lobby for "artists'" interests, but which is entirely about pushing the agenda of the RIAA in increasing royalties. It was originally set up to target terrestrial radio rates, but has had a real hard on for Pandora lately. In April, we wrote about the group's nutty argument that Pandora was deliberately not selling ads to avoid profitability. They honestly claimed that all Pandora had to do was sell additional ads and profitability would be no problem -- leaving out the simple fact that, if Pandora could sell more ads, it would. The ad business is a terrible business, and it's not easy to sell into it. Yet, these lobbyists pretend anyone can just snap their fingers and the ad dollars come rolling in. More recently, they argued that Pandora's attempt to seek the same internet streaming rates that other companies get was "a sick joke." Again, they weren't seeking lower rates as others -- but rather the exact same rates that competitors like iHeartRadio had. And they were told it was a sick joke?

The latest is really just blatant stupidity. MusicFirst commissioned a study from Jeffrey Eisenach, and apparently they gave him the instructions to do anything possible to make Pandora's rates look "low," because the results of the study don't even pass the most basic laugh test. I honestly, expected some reasonable argument, but got the following:

Other Retailers Pay as Much or More Than Pandora: Measured as a proportion of revenues, several major "online" retailers, including 1-800 Flowers, Netflix, and Overstock.com, and "brick-and-mortar" retailers, like Best Buy and WalMart, pay about as much as or more than Pandora for the products they purchase from others and resell to consumers.

Yes, you read that right. They're comparing Pandora to retailers, rather than other streaming sites. But, Pandora is not a retailer like 1-800 Flowers. I mean, you have to be scraping the absolute bottom of the barrel to try to prove your point when the best you can come up with is this totally different and unrelated business of reselling flowers pays a higher rate to its wholesale providers than a streaming radio station pays for licensing its songs. That's not even comparing apples to oranges, because at least both of those are fruit. Even apples to orangutans would be comparing two living things. This is comparing apples to ornamental knickknacks.

Two of Pandora's Major Online Music Competitors Pay More: "Pandora has made much of the high proportion of revenues it pays out in royalties, but there is nothing surprising or uneconomic about a retailer passing through a high proportion of its gross revenues to the ultimate producers of the products it sells – indeed, at least two of Pandora's major competitors, Spotify and iTunes, pay out higher proportions of their revenues (70 percent) in royalties than does Pandora."

Of course, once again, iTunes is not a competitor (well, other than the streaming service they just launched, but that's not what's being discussed here). But, of course, iTunes uses music as an enticement to get people to buy iPhones, not to make money directly off of music. And, using Spotify as an example here actually cuts against their argument, since the rates Spotify pays are insanely high as well, took over two years to negotiate, and yet some musicians are still whining that it's not enough.

Pandora Has Realized Hundreds of Millions in Profits for Investors: "Pandora's initial investors, including venture capital firms and Pandora's executives, have already realized hundreds of millions of dollars in profits since the company's 2011 Initial Public Offering." In addition, "Company founder Tim Westergren sold shares totaling nearly $15 million between January 2012 and June 2013"

Um, then why didn't the RIAA invest? This argument gets thrown out sometimes by people who don't understand the difference between revenue and equity. Capital gains from investment -- especially for startups -- is entirely different from revenue, yet people who don't understand the difference between income and equity like to compare the two as if it means something. It doesn't. It just makes them look ignorant. You get capital gains from taking an investment risk (many of which don't pan out) and it is not related directly to revenue. The fact that someone who put in a lot of equity is able to capitalize on that is very different from arguing that a business is profitable. If you don't understand the difference between equity and revenue, you really shouldn't comment on it, and it's pretty sad to put it in an official "study" as it just seems to scream ignorance about how these things work.

Basically, there's no "there" in the study. The best they can do is pretend that Pandora is in a totally different business to attack it. It kind of shows just how desperate the RIAA is getting.